Disney stopped making games because it doesn't understand how to make games

Disney is the biggest, most important entertainment company in the world.

These are the folks behind Mickey Mouse and Donald Duck, yes, but it's also the same company that now owns Marvel, Star Wars, Indiana Jones, and every other blockbuster franchise. Disney owns multiple TV networks, including ABC and ESPN (!!). Disney owns Pixar. Disney even owns one-third of Hulu, the streaming network.

Disney/Lucasfilm

There is no overstating how massive and influential Disney — the corporation — is when it comes to entertainment. Regardless of these facts, Disney officially killed off its in-house video game production on Tuesday.

With that news comes the death of "Disney Infinity," the company's massively popular game series where players buy physical toys and are able to play with those characters in-game. It was essentially a virtual sandbox that allowed Disney to sell toys for its entire catalog of properties, from Darth Vader to Iron Man. In ending "Infinity," Disney's taking a $174 million hit. Yikes!

The bigger news, however, is that Disney's moving away from video game production entirely; the company will license its properties to video game developers and publishers going forward. Think more stuff like "Star Wars Battlefront," less stuff like "Disney Infinity."

So, why is the biggest entertainment company in the world walking away from an entire medium?

Darth Vader, as seen in "Disney Infinity 3.0." Disney

"We feel like we're better off managing the risk that the business delivers by licensing instead of publishing," Disney CEO Bob Iger said in the investor call where the news was announced.

In plain English: Video games are financially risky, and it's easier to let other companies pay us for the right to make video games based on our properties than to make our own.

Iger's not wrong — like so many virtual battlefields, the video game landscape is littered with the corpses of dead studios and publishers. Disney would know, as it purchased and subsequently shut down a whole mess of these game studios itself. Here's a short list:

LucasArts, makers of the "Monkey Island" series, the "Maniac Mansion" series, and literally dozens of others

Wideload Games, makers of "Guilty Pary"

Avalanche Software, makers of "Disney Infinity"

Between 2005 and 2016, Disney bought a half dozen game studios and then closed them all. It was part of a bigger push into video games — a push that Disney never fully got behind, which resulted in a half dozen studios (with hundreds of employees) being closed.

LucasArts/Disney Interactive

Though Disney is in the entertainment business, the company seemingly never grasped how to operate in the realm of video games. "That business is a changing business and we did not have enough confidence in the business," Iger said on this week's call.

Video games are, indeed, a changing business. But so is film and television. Just think about how much has changed in the world of TV since 2010, let alone since 2005.

The issue isn't that games are a changing business, it's that Disney doesn't understand how to operate in that business. Let's look at the case of "Split/Second," an excellent racing game created by Disney's Black Rock Studio. The game launched on May 18, 2010 — the same day that juggernaut "Red Dead Redemption" was released. It launched one week before another, very similar racing game named "Blur" launched.

This could just be chocked up to bad luck, but a publisher that understood the video game industry would've made sure to get out of the way of anything released by Rockstar Games, the makers of "Red Dead Redemption" (and 800-lb gorilla "Grand Theft Auto").

"Red Dead Redemption" was the game that everyone bought in May 2010, instead of whatever anyone else was selling. Rockstar Games

This seeming lack of logical operations can be applied to instance after instance of Disney investing in a big game only to make a major misstep as it crossed the finish line. "Disney Infinity" is the latest example of that.

As Kotaku's Mike Fahey points out in an incisive headline: "Disney Infinity Died Just As It Was Getting Good." Indeed, this statement can be applied to many of Disney's failed video game projects across the past decade. Instead of actually fixing the problem, Disney chose instead to abandon an entire entertainment medium.